Europe midday: Stocks slip ahead of key Fed speech

Stocks on the Continent failed to track the gains seen overnight on Wall Street despite stronger than expected readings for factory and services sector activity in the single currency bloc after China's Commerce Ministry warned the country would retaliate against any new US tariffs.

Equities in the US bounced back on Wednesday evening despite the release of a set of Fed meeting minutes that some City-based analysts said little support for further interest rate cuts.

And according to Philip Marey at Rabobank, the minutes showed: "that most in the Committee share Chairman Powell's delusion that the Fed is making mid-cycle adjustments to monetary policy."

Nonetheless, as Marey also pointed out, at least two rate-setters on the Federal Open Market Committee had argued in favour of a bigger 50 basis point cut when policymakers last met on 30-31 July.

So now focus was shifting to a key speech by Fed chief Jerome Powell scheduled for the next day.

As of 1211 BST, the benchmark Stoxx 600 was drifting lower by 0.22% to 374.96, alongside a dip of 0.05% for Germany's Dax to 11,796.08 while the FTSE Mibtel was ahead by 0.29% at 20,908.36.

Earlier, China's Commerce Ministry said it would be left with no choice but to put in place countermeasures if the US chose to follow through with its wrong actions, in an apparent reference to the new US trade tariffs that were set to go into effect on 1 September.

In the background, the US dollar was appreciating by 0.32% to 7.0847 versus the Chinese yuan.

The economic gods smiled on the euro area on Thursday as IHS Markit reported a better than expected reading of 51.8 on its composite output index for August (consensus: 51.5).

Nonetheless, as the survey compiler's chief business economist, Chris Williamson, pointed out, the relatively "bright spot" that was France was offset by the biggest drop for six years in new orders in Germany.

"The risk remains, therefore, that the euro area's largest economy will have fallen into technical recession in the third quarter," he said.